Rogers Sees Talking Machines Making Up 5% of Revenue by 2015

By Manuel Baigorri and Hugo Miller -
Feb 26, 2013

Rogers Communications Inc. (RCI/B), Canada’s
largest wireless carrier, expects to get at least 5 percent of
sales by 2015 from machines using its network to talk to each
other, a fresh revenue source as smartphone growth slows.

Machine-to-machine communications can help oil and gas
companies, for example, monitor equipment and employees who are
working alone at remote sites, alerting humans if something goes
wrong. Rogers is eyeing an opportunity to sell such devices and
services in the consumer electronics, retail, financial and
energy markets, taking the lead in an industry that will reach
$1 billion in Canadian sales by 2015, said Mansell Nelson, vice
president for advanced business solutions.

“We are pretty well positioned to get a good chunk of
that,” Nelson said in an interview today at Barcelona’s Mobile
World Congress. “It’s still a small number relative to our
total revenue but it will be one of our fastest-growing
categories.”

Rogers, which sold the first BlackBerry smartphone in
Canada and offered Apple Inc.’s iPhone for two-and-a-half years
before competitors could, is looking for new sources of revenue
as smartphone sales growth slows and rivals BCE Inc. (BCE) and Telus
Corp. (T) win a growing share of the Canadian market for the high-
end phones.

Reviving Growth

Rogers is aiming for machine-to-machine sales of $700
million to $800 million a year by 2015, Nelson said. That year,
Rogers’s total revenue is expected to climb to C$13.4 billion
($13.2 billion) from C$12.5 billion in 2012, according to the
average estimate of analysts surveyed by Bloomberg. Overall
sales have grown by less than 2 percent each of the past two
years after averaging 3.5 percent in 2009 and 2010.

Rogers fell 0.6 percent to C$48.09 at the close in Toronto.
The stock has climbed 6.5 percent this year, compared with a 1.8
percent gain for the Standard & Poor’s/TSX composite index.

In addition to their industrial applications, machine-to-
machine communications can be used by consumers to allow their
devices to relay information to each other. A mobile phone, for
example, could keep tabs on a home alarm to notify its user if
it detects signs of an intrusion.

Rogers, which also owns TV and radio stations, publishes
magazines and owns Major League Baseball’s Toronto Blue Jays,
said earlier this month that its machine-to-machine business
finished last year with 800,000 connected end-to-end devices, up
27 percent from a year earlier. Rogers doesn’t disclose its
revenue from machine-to-machine installations.

Once people see the impact of this technology on their
lives, its growth should accelerate, Nelson said. The company is
targeting so-called M2M revenue to grow 50 percent a year.

“If we make it easier for customers to understand what
this technology will do for them we are going to see the
adoption rate increase rapidly,” Nelson said. “There’s a lot
of positive reaction from our customers.”